The main legal point established in the judgment is that the presumption in favor of the holder and the determination of liability under the Negotiable Instruments Act are questions of fact to be decided at trial, and the defense of the accused cannot be considered at the stage of quashment of criminal proceedings.

Anand Pathak, J.

1. This order shall also govern disposal of M. Cr. C. No. 10130/2016 and 10131/2016 as facts and circumstances of both the case are similar. However, for the sake of arguments, facts of M. Cr. C. No. 10130/2016 are being taken for consideration.

Present petition under section 482 of Criminal Procedure Code has been filed by the petitioner/accused challenging the order dated 8.7.2016 passed by 11th Additional Sessions Judge, Gwalior in Criminal Revision No. 6400162/2016; whereby, the order dated 6.5.2016 passed by JMFC, Gwalior in Criminal Case No. 464/2015 has been confirmed. Petitioner has also challenged the criminal proceedings initiated by the respondent against him under section 138 of Negotiable Instruments Act.

2. Learned counsel for the petitioner submits that as per the Collaboration Agreement dated 20.6.2014, present petitioner had to make available certain pieces of land to the respondent and had to share the profit in 50-50 % ratio. In pursuance to the agreement, the petitioner has made available certain pieces of land to the respondent for which the respondent has paid the amount to land-owners directly, through account payee cheques. Later on due to certain disputes the respondent asked the petitioner to deposit some security amount in favour of the respondent, therefore, petitioner under compulsion has issued blank cheque bearing No. 091287 (undated) of Axis Bank, Gwalior in favour of respondent. The cheque accompanied the letter dated 20.6.2014; wherein, reference (of cheque to be kept in safe custody) has been mentioned. The said letter dated 20.6.2014 is on record.

3. When the cheque was presented by the respondent for honouring the same, the cheque got bounced and dishonoured and therefore, respondent has preferred a criminal complaint against the petitioner under section 138 of the Negotiable Instruments Act contending inter-alia that the petitioner has not completed his part of compromise and has issued a cheque which got bounced due to insufficiency of funds. The Judicial Magistrate First Class, Gwalior has issued summons under section 204 of Criminal Procedure Code to the petitioner who appeared before the Court and filed an application for dismissal of the complaint on the ground as alleged in the present petition. The said application got rejected by the JMFC, Gwalior vide order dated 6.5.2016, which was challenged in the revisional jurisdiction before the Sessions Court but met with the same result. Therefore, petitioner is before this Court under section 482 of Criminal Procedure Code.

4. The main ground for agitating the case raised by the petitioner is that as per the provisions as contained in Explanation to section 138 of Negotiable instruments Act for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability and in the present case no legally enforceable debt or liability exists on the shoulder of present petitioner so as to discharge the same, he issued the same. According to him, the agreement contemplates share of profit at the ratio of 50-50% once the project is completed, Here in the present case as per the collaboration agreement, no project has, been undertaken therefore, no question of any liability exists in respect of petitioner. He further submitted that the collaboration agreement was notarised on 30th June, 2014; whereas, the land agreement between the respondent and the land owners has been executed between the period 20.5.2014 to 30.6.2014, therefore, no liability in respect of the transactions completed before 30.6.2014 exists and on this count alone, the petitioner stressed over the explanation clause of section 138 of Negotiable Instruments Act and submitted that no case is made out.

5. Petitioner's further grievance is that once the legally enforceable debt is not available to be discharged by the petitioner, therefore, the cheque if at all issued as security cannot be encashed by the respondent. He submitted